Loom is a variety or type of value transfer software. As one might argue that the best things in life are the simple pleasures, the Loom system might also be characterized as simple accounting software developed to meet the needs of online consumers. The system functions by offering users the ability to send and receive digital units(payments). The Loom system gives all users the ability to create private digital units specific to each user’s needs. After a unit is created, parts of that digital unit or the whole unit can then be transferred between users. These digital units are known as “assets”. Units are divisible out to any scale desired but a 7 is typical for gold. (00.1234567)

To initiate any activity on the Loom system, each user must create at least one wallet (also known as a folder) which will hold all of the user’s assets. There are no formal accounts in a Loom system as you may find in conventional online payment systems like PayPal or Moneybookers. Unlike PayPal which restricts all users to just one account, Loom users are permitted to have multiple folders.

The process of opening a Loom folder, requires NO identifying information which, like a PayPal type system, would connect, link and legally bind a user through the Terms Of Service Agreement. A PayPal or Moneybookers accounts may require some or all of these items:

Name

Address

Phone Number

Email

Credit Card Information

Local Banking Information

Utility Bill

Telephone Call Verification

ID Copy

The Loom folder does not require any identifying information (not even a name) and the only activity required to create a Loom folder is to choose a passphrase. The passphrase is the single identifying item(data) required to open & operate a Loom folder. Don’t lose it and don’t let others get your passphrase.

Security of design and basic transaction functions

A basic description of the Loom system might involve comparing it to an endless checkerboard or grid. As one user wants to send an asset to another user, a randomly generated location in cyberspace accepts a deposit of that asset. The secret location (number) on the grid which now contains that asset value is then delivered to the recipient. Private delivery of this number can be accomplished by any host of methods including but not limited to email, phone, fax, sms or written on a slip of paper and hand delivered.

Once the receiver has the number in his possession, they can simply log in to their private folder and accept the asset (remove it from the identified checkerboard location and place into their folder). This is a rather simplified description of the Loom operation but it is accurate.

There are also a host of software and API add ons which can automate this process, simplify the acceptance of an asset (payment) or incorporate the Loom activities into an existing shopping cart application. Example: Arto Bendiken is now integrating the Loom system into Drupal. See http://drupal.org/project/digitalcurrency , http://ar.to/

The information displayed in a Loom wallet(folder) is contained in these four sections:

A dialog box for making payments

The assets in your wallet

Any assets in transit between you and your contacts

Your personal transaction history

To sum things up, “an account” at any standard online payments company is comparable “a folder” in the Loom system. A payment is comparable to an asset transfer. Unlike a Moneybookers account where a transaction may be completed by sending money, Loom transactions have two parts. The sender places the asset in a shared location and the receiver then picks up the asset. The transaction is not completed and may be recalled until the receiver picks up the asset. By placing an asset on a private location and sharing that location, the Loom user is creating a “shared asset” which can be accessed by both users and is visible in both folders.

What is a Loom asset?

An asset is a type of digital value that can be created by a Loom user and moved around between contacts in the Loom system. Assets under the full ownership of the issuer which have not been already transferred to another user destroyed(removed from the system) by that issuers.

An digital asset may represent something of value in the real world. However, the Loom asset is just the digital representation of ownership. In effect users are moving the digital “right of title” of a physical asset. If the issuer of a Loom The representation, worth and value of a digital Loom asset are determined by the individual who created it, known as the issuer.

Any user can issue new assets at anytime, these new assets may be identified in any way the issuer permits. However, most new users find it more common to accept assets already issued by another trusted parties. A new user may have been invited to create a folder and use the Loom system by accepting some existing assets given to him by an existing user.

Example: Graham is an existing user who has issued a digital gold gram product. A brand new user may be invited to create a folder and receive 2 grams of digital gold as payment for services rendered. In such a case the new user would not issue his or her own assets but just receive the gold gram payment.

Please understand that no physical assets ever change hands. The Loom system offers digital units which represent an item. Those digital units may have a valuable physical asset pledged by the issuer as backing or the digital assets may represent anything else of no real world value, such as a “Thank You”, an “IOU” or just “Hugs and Kisses”.

Creating a new asset

Users may create as many assets as they desire, there is no limit to the variety or amount of assets which can be privately created by any user. (no restrictions) Users also have the option to transact exchanges using existing assets which were issued by another party. As a new user, you are not required to create new assets, you may use already issued assets.

When a user creates a new asset, that user is the sole issuer and pays that new asset into existence. Once created, a new asset will appear as a negative balance on the creator’s home page. The negative reference indicates that the asset is a liability to that user who created it. Viewing a brand new asset, the ledger will show a balance of zero (-0, negative zero) because at that time no units of that asset have been spent into existence. Once transfers of the asset begin to take place the balance for that asset will drop further and further into the negative value depending on how much is being used at any time. The magnitude of the negative balance will, at all times, be equal the total quantity of the asset held by all other users in the system. This total figure is equal to all currently issued digital units of that asset. Example: If 100 users each have 1 unit, the issuer’s balance will show -100.

Details of an asset

Adding asset details to your folder is required before anyone can transact in a particular asset.

In order to effect a transfer between users, the receiver must be given specific details about the units and then add those details to their folder. Once the asset parameters exist in the user’s account, transfers of that asset can occur between folders.

Assets have several parameters which must be ’set’ upon the creation of that asset and also anytime another user adds the ability to accept that asset into their folder. These 4 parameters are shown here.

The “ID” is a number which uniquely identifies the asset. It must be a “hexadecimal” number, consisting of exactly 32 digits 0-9 or a-f. Note that when creating a new asset, the software will automatically insert a brand new random ID on your behalf, which can be used with confidence or if preferred any other hex number may be substituted at the time of creation, if so desired.

The “Name” is used to identify the asset and can be anything the user prefers. If the original issuer called his assets apples, another user may want to exactly copy this term or use another. Any user may label that asset anything they desire. It does not have to be unique across the entire Loom system. (As a user, you may want to label the asset “green apples” or “purple oranges”, this is your choice.) This label is only visible from the user’s own folder. The ID is the specific label which truly distinguishes the asset.

The Scale is a number which tells the system where to put the decimal point. For example, if you have 123456789 units of the asset type and the Scale is set to 7, the number will be displayed as 12.3456789 in your folder. If you omit the Scale, it’s the same as 0.

The Min Precision is optional. This forces the system to display at least a certain number of decimal places. For example, if you set Min Precision to 3, then the number “12.1″ will be displayed as “12.100″.

Fortunately the software developer has automated much of this work. To add an asset to your folder, a user is only required to enter the ID, the rest is set automatically.

Activity between users falls into three categories: person2person, person2business and business2business. (Loom makes no distinction between “person” and “business”) The digital units which exist on a Loom system are distinctly private and their existence is only known to the user which created the unit. (issuer) There is no public disclosure (menu, index or list) of digital units which exist on the Loom software.

As a user, if you create an asset for the movement of value between specific friends or business associates, that asset if only known to you and to others whom you disclose its existence. (There is no dropdown menu or list of assets where a random user may select to use your private asset, this information is absolutely private to the issuer.) The actual knowledge an issuers name, who uses that asset and what that asset is used for….is 100% private. Even the operator of the system, the person who installed the software and operates the server, does not have the ability to discover which assets have been created or are operating on the system.

Some Loom users will keep their assets private and only provide that information to known friends or associates. Other users will publicly list their units with the intent of attracting more customers and business. The bottom line: If others learn of your asset it is because you wanted to share that information.

As a user, if you are not aware of an asset or have not added the asset’s details to your folder, it is technically impossible to effect a transfer of that asset. Example: If I tell you, I would like to transfer you ownership of 100 “Guru Gold” grams, before you can accept these assets, you must have already received the precise ID, Scale and Min Precision. Once a user has set up their folder to send or receive this asset, movement of units in or out of the account can begin. Since this process is now automated the only item needed to add the asset profile to your folder is the ID.

Loom assets, should NOT be considered or labeled as digital money, digital currency or any sort of physical assets of any value. The term “value transfer” as generally defined also is NOT 100% accurate for describing Loom software because privately created digital units only represent the ownership title to an asset not the actual item. These asset transfers might not not considered “digital money” as the digital unit representing an ‘asset’ may have real value backing such as gold or the asset may exist as a virtual label. The asset may have no real worth beyond its digital representation between two users. (one asset may be gold grams, hugs-and-kisses, and still another may be thank-you-happy-thoughts–Sending a friend “thank-you-happy” units technically cannot be classified as a value transfer:-)

Asset examples:

Guru Gold Grams

Thank-You-Happy Thoughts

These may be two assets which trade between Loom users and each digital unit is a title representing something to that user. However, these digital units may or may not represent any real value.

Introducing an asset to another user

If a user needs to exchange an asset with another user who has never before accepted that asset into his own folder, the receiver needs an ID description like this one:

It should be easy to double-click, copy, and paste that description into an email or chat. You can also publish it on a blog or web site (along with some explanatory text) so others can see it and investigate it for themselves.

When the receiver gets this ID, he can easily accept it into his folder. After that time the two users can create a shared point and exchange this asset.

The entire Loom system is built upon a very solid Application Programmer Interface (API). There are two primary APIs:

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I am an e-Money researcher and a Founding Director of the Bitcoin Foundation. My career has included senior influential posts at Sumitomo Bank, VISA, VeriSign, and Hushmail.

"Free-market protagonists, such as Matonis, regard cybercash as better than traditional government-issued or -regulated money, because it is determined by market forces and thus nonpolitical in nature." --Robert Guttmann, Professor of Economics at Hofstra University, in Cybercash: The Coming Era of Electronic Money, 2002

"Matonis is quite correct that the new technology makes easier the use of multiple private currencies." --Mark Bernkopf, Federal Reserve Bank of New York, in "Electronic Cash and Monetary Policy", 1996

"Matonis argues that what is about to happen in the world of money is nothing less than the birth of a new Knowledge Age industry: the development, issuance, and management of private currencies." --Seth Godin in Presenting Digital Cash, 1995